Upbeat U.S. 2Q GDP Report to Deter EUR/USD Rally

U.S. 2Q GDP to Expand Annualized 2.7%- Fastest Pace of Growth Since 3Q 2016.

Core PCE to Hold Steady during 0.9% per Annum; Lowest Reading Since 1Q 2015.

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Trading a News: U.S. Gross Domestic Product (GDP)

US GDP

The rough 2Q U.S. Gross Domestic Product (GDP) news competence deter a near-term convene in EUR/USD as a updated total are approaching to uncover an ceiling rider in a enlargement rate.

Why Is This Event Important:

Signs of a stronger-than-expected activity competence hint a bullish greeting in a U.S. dollar as it encourages a Federal Open Market Committee (FOMC) to serve normalize financial process earlier rather than later. As a result, Chair Janet Yellen and Co. competence stay on march to broach 3 rate-hikes in 2017 generally as a genuine economy approaches full-employment.

However, a FOMC competence try to buy some-more time during a successive seductiveness rate preference on Sep 20 as a core Personal Consumption Expenditure (PCE), a Fed’s elite sign for inflation, sits during a lowest spin given 2015. In turn, a executive bank competence lift a stream process into 2016 as many Fed officials ‘saw some odds that acceleration competence sojourn next 2 percent for longer than they now expected, and several indicated that a risks to a acceleration opinion could be slanted to a downside.

Impact that the U.S. GDP report has had on EUR/USD during a last release

1Q P 2017 U.S. Gross Domestic Product (GDP)

EUR/USD 10-Minute Chart

EUR/USD Chart

The rough 1Q Gross Domestic Product (GDP) news showed an ceiling rider in a enlargement rate, with a economy expanding an annualized 1.2% during a initial three-months of 2017. At a same time, a core Personal Consumption Expenditure (PCE), a Fed’s elite sign for inflation, modernized an annualized 2.1% during a same duration amid forecasts for a 2.0% print, while Personal Consumption showed a identical energetic as a figure climbed to 0.6% from an initial imitation of 0.3%. The U.S. dollar gained belligerent followed a better-than-expected GDP report, with EUR/USD holding next a 1.1200 hoop via a day to tighten during 1.1179.

How To Trade This Event Risk(Video)

Bullish USD Trade: 2Q GDP Report Instills Improved Outlook

  • Need a red, five-minute candle successive to a GDP news to cruise a brief EUR/USD trade.
  • If a marketplace greeting favors a bullish dollar position, sell EUR/USD with dual apart lots.
  • Set stop during a near-by pitch high/reasonable stretch from entry; demeanour for during slightest 1:1 risk-to-reward.
  • Move stop to breakeven on remaining position once initial aim is met, set reasonable limit.

Bearish USD Trade: Growth and Inflation Falls Short of Market Forecast

  • Need a green, five-minute EUR/USD candle to cruise a brief dollar position.
  • Implement a same proceed as a bullish dollar trade, only in reverse.

Potential Price Targets For The Release

EUR/USD Daily Chart

EUR/USD Daily Chart

Check out a EUR/USD quarterly projections in a FREE DailyFX Trading Forecasts

  • Near-term opinion for EUR/USD stays constructive as a bull-flag unfolds, with a span finally stuffing a opening from January-2015 (1.2000 down to 1.1955).
  • Another tighten above a 1.1960 (38.2% retracement) hurdle competence hint a run during the 1.2130 (50% retracement) region as triggers a array of aloft highs lows; gripping a tighten eye on a Relative Strength Index (RSI as it attempts to pull into overbought territory.
  • Interim Resistance: 1.2320 (23.6% retracement) to 1.2370 (61.8% expansion)
  • Interim Support: 1.1390 (61.8% retracement) to 1.1400 (61.8% expansion)

EUR/USD Retail Sentiment

EUR/USD Retail Sentiment

See how shifts in EUR/USD retail positioning are impacting trend- Click here to learn some-more about sentiment!

Retail merchant information shows 25.7% of traders are net-long EUR/USD with a ratio of traders brief to prolonged during 2.88 to 1. In fact, traders have remained net-short given April 18 when EUR/USD traded nearby 1.08143; cost has changed 11.0% aloft given then. The series of traders net-long is 3.5% reduce than yesterday and 23.4% reduce from final week, while a series of traders net-short is 4.3% reduce than yesterday and 13.8% aloft from final week.

— Written by David Song, Currency Analyst

To hit David, e-mail dsong@dailyfx.com. Follow me on Twitter during @DavidJSong.

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